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at the bell

Shares of Manulife Financial are trading around their highest levels in two years.Galit Rodan/The Globe and Mail

Life insurance giant Manulife Financial Corp. looks to be finally turning the corner on the disasters it experienced during the recent financial crisis.

The shares, which recently touched $16.02, are trading around their highest levels in two years. They're well above their 12-month low near $10, which matched the stock's worst reading during the stock market panic, indicating just how jittery investors have been toward Canada's best-known largest life insurer.

Also on the good news front, analysts are upping their targets, and after being a serial disappointer when it comes to financial results, Manulife is beginning to surprise with its upside. Short sellers are paring positions, another positive sign. And then there is some chatter on the Street that investments in the company could be a better bet than the banks.

That said, it's clearly not yet back to the good old days for the insurer. Before the crash, Manulife traded for more than $40 a share and had a market capitalization rivalling the major banks.

But Manulife's prospects are clearly on the mend, and investors should take notice because this comeback story is likely to be in its early days. Barring a return to a recession, the shares likely have much further to run, all the while having a respectable 3.3-per-cent dividend yield.

A lengthy stock uptrend would almost certainly be the case if the company comes anywhere close to attaining its corporate goal for 2016 of making $4-billion in core earnings, or profit excluding most changes in the value of investments, nearly double last year's figure. Given that managers have stuck their necks with a firm number, it's a do-or-die target that executives will have to hit, or start looking over their shoulder.

Although Canadians look upon Manulife as a domestic life insurance company, its crown jewels are its Asian operations. That's where Manulife's chances of really boosting shareholder returns lie. A good review of the company's large exposure to fast growing Asian economies appeared recently in investment website Seeking Alpha. Manulife has morphed into one of Canada's best plays on the long term growth of emerging markets. It's the second largest foreign insurer in China, ranks No. 3 in Vietnam and No. 8 in Hong Kong.

Manulife's shares recently received a boost from first-quarter earnings. The numbers impressed analysts, with solid profitability and a huge gain in Asian sales of wealth management products, such as mutual funds. Those sales more than doubled over the same period in 2012, while in the U.S., they also reached record levels.

After looking at the results, Gabriel Dechaine at Credit-Suisse recently upgraded the stock to "outperform," from a hold, and upped his target to $18 a share, the highest on the Street. Mr. Dechaine praised the company's "strong business growth trends" and said it, along with other life insurers, would likely benefit from any rotation out of commodity-related stocks and the banks.

At Desjardins Capital Market, analyst Michael Goldberg boosted his target to $17.25 from $16, saying the company is "well positioned for continued growth in insurance and wealth management products." Reflecting the improved outlook, he estimates that earnings per share will rise from 88¢ last year to $1.35 this year and $1.50 next.

A big part of what got Manulife into trouble during the crash is that it had a huge unhedged equity portfolio. When stocks cratered, the company was exposed to huge paper losses. Mr. Goldberg says that the company has taken advantage of strong stock markets to now be "virtually fully hedged."

Like all insurance companies, Manulife also has been suffering from low interest rates, which clip long-term investment returns on the premiums received from policy holders. But rates look like they've recently found a bottom.

While it's never safe to put full faith in analyst views, they may be onto something at Manulife. Of the analysts who follow the company, 12 of them rate it as a "buy," while only one has a "sell": EVA Dimensions, which didn't return a request for comment.